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Trade Structure, FTAs, and Economic Growth

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  • Chan‐Hyun Sohn
  • Hongshik Lee

Abstract

What is the relationship between trade and economic growth? Does trade positively affect economic growth? Owing to the ambiguity of this relationship, the empirical relationship has remained open (Rodriguez and Rodrik, 2001; Baldwin, 2003). This paper introduces “trade structure” variables, borrowed from the paper of Lederman and Maloney (2003), and applies them to the relationship. A dynamic panel estimation for the data of 66 countries during 1991–2004 is used to verify the validity and robustness of the relationship. Trade structure variables show strong evidence of positive effects on growth. Free‐trade agreements/areas (FTAs) also enhance economic growth. East Asia shows a different relationship between trade and growth than the world and reflects a weaker role of FTAs in its growth.

Suggested Citation

  • Chan‐Hyun Sohn & Hongshik Lee, 2010. "Trade Structure, FTAs, and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 14(3), pages 683-698, August.
    • Handle: RePEc:bla:rdevec:v:14:y:2010:i:3:p:683-698
    DOI: 10.1111/j.1467-9361.2010.00574.x
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    Cited by:

    1. Hexian Wang & Wei Liu & Mengyuan Zhu & Qing Wang, 2018. "Embrace or Not? An Empirical Study of the Impact of Globalization on the Country’s Sustainability in the Case of NAFTA," Sustainability, MDPI, vol. 10(10), pages 1-16, September.
    2. Jin Suk Park & Eunju Hwang, 2023. "Sectoral FTA gains, conflicts, and the role of interindustry factor mobility: Evidence from Korea's free trade agreement," Pacific Economic Review, Wiley Blackwell, vol. 28(1), pages 97-123, February.
    3. Wenni Lei & Yuwei Luo, 2022. "Institutions Rule in Export Diversity," Sustainability, MDPI, vol. 14(18), pages 1-14, September.
    4. Al Faithrich C. Navarrete & Virgillio M. Tatlonghari, 2018. "An empirical assessment of the effects of the Japan–Philippine Economic Partnership Agreement (JPEPA) on Philippine exports to Japan: a gravity model approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-20, December.
    5. Xiaomeng Li & Hongbo Cai & Siyu Huang & Jiajun Ma & Qinghua Chen, 2022. "The universal pathway to commodity structure upgrading in global trade evolution," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(4), pages 1047-1067, October.
    6. Shinichi Furuzawa & Lily Kiminami, 2017. "Changes in the international specialization of food manufacturing industry in East Asia," Asia-Pacific Journal of Regional Science, Springer, vol. 1(2), pages 359-378, October.
    7. Kaveri Deb, 2022. "Trade Structure and Economic Growth in Emerging and Developing Asia: A Dynamic Panel Analysis," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(3), pages 601-628, September.

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